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Corporate Transparency Act

What Is the Purpose of the Corporate Transparency Act?


The principal purpose of the Corporate Transparency Act is to deter money laundering and other crimes by making it clear who the individuals behind a particular business entity are.


What Are the New Reporting Requirements Imposed by the Corporate Transparency Act?


The Corporate Transparency Act requires that companies identify their owners or others who exercise a significant degree of control over the business.


How Can Companies Comply with the Corporate Transparency Act?


Companies can comply with the Corporate Transparency Act by filing the required information with FinCEN, the Treasury Department bureau responsible for administering the law. Deadlines differ depending on when the company was formed, and many types of companies are exempt from the law.


What Are the Potential Penalties for Noncompliance with the Corporate Transparency Act?


The potential penalties for “willful” noncompliance with the law include fines ranging from $500 to $10,000 per violation and up to 2 years in prison. 


What Challenges Do Small Businesses Face in Complying with the Corporate Transparency Act?


The first challenge many small businesses face in complying with the law is simply becoming aware of it and the relevant deadlines. FinCEN has a 50-page guide to the rules on its website.22

U.S. Financial Crimes Enforcement Network. “Small Entity Compliance Guide.”


The Bottom Line

The Corporate Transparency Act represents an attempt by the U.S. Congress to curtail money laundering, the financing of terrorist activities, and other crimes. Critics say it imposes an undue burden on millions of small businesses in order to catch the tiny fraction of them that may be breaking the law.


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Corporate Transparency Act today.

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